An online fault detection and isolation (FDI) method for several common sensor faults and even demagnetization of PMSM is proposed by combining model-based and signal analysis technology. To begin with, the field reconstruction method (FRM) of PMSM is employed to obtain the flux residuals which are used as the criterion of fault detection. Then, the flux residuals are transformed by multi sequence harmonic synchronous rotating transformation and inputted into low pass filters (LPFs) in order to obtain the DC components. Last, offset and gain faults of the two phase current sensors, offset fault of the rotor angle sensor and permanent magnet (PM) demagnetization can be isolated by comparing the DC components and preset thresholds. The detection and isolation strategy of PMSM is validated by motor controller hardware in motor bench tests.